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Updated: March 29, 2010 17:04 IST

China jails Rio Tinto executives

Ananth Krishnan
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Tom Connor, Australia's Consul-General in Shanghai, briefs journalists near Shanghai's No. 1 People's Intermediate Court on Monday.
Tom Connor, Australia's Consul-General in Shanghai, briefs journalists near Shanghai's No. 1 People's Intermediate Court on Monday.

An Australian executive at mining giant Rio Tinto has been sentenced to 10 years in prison by a Shanghai court, on charges of bribery and stealing commercial secrets.

Stern Hu, who headed the British-Australian mining firm's sales in China, had last week pleaded guilty to accepting two bribes worth US $ 935,000, according to prosecutors. Mr. Hu and three Chinese colleagues were on Monday handed sentences ranging from seven to 14 years.

The Rio Tinto trial has attracted much media attention in China and abroad, and has also raised concerns among many foreign companies doing business here about what they describe as arbitrary and opaque laws governing the trading of information.

Mr. Hu's three Chinese colleagues were found guilty of accepting bribes up to $9 million and stealing steel industry secrets, State media reported.

Foreign journalists were barred from attending the proceedings of the trial. Western diplomats have criticised the lack of transparency in the proceedings, with observers and overseas officials prevented from attending any session involving details of the information the executives allegedly stole.

Western diplomats The Hindu spoke to said they were surprised by the lengthy sentences handed to Mr. Hu and his colleagues, suggesting that the Chinese government sought to send a tough message to foreign firms doing business here.

The maximum sentence Mr. Hu was likely to receive was 12 years, sources said. But following his decision to plead guilty when the trial opened last week, many diplomats expected the Shanghai court to hand down a lesser sentence of seven years.

The Rio Tinto trial, along with the recent announcement by United States Internet giant Google to close down its search engine on the Chinese mainland, has led to rising concerns among many foreign businesses here about the pit-falls of doing business in China. A recently-released survey by the American Chamber of Commerce, an influential industry lobby group in Beijing, said 38 per cent of companies felt “unwelcome” in China, up from 26 per cent last year.

The Rio Tinto case also opened at a time of tensions between China and Australia, whose mineral resources have come under increasing demand from Chinese manufacturing companies.

The four executives were arrested in July, shortly after the mining firm cancelled a $ 19.5 billion deal with State-owned Chinalco, signing instead with BHP Billiton. The decision followed growing public concern in Australia of a trend of Chinese State-owned companies making large acquisitions of the country's mineral resources.

Chinese officials have denied that the arrests were retaliation for decision to scrap the deal, and said they had substantial evidence to prove Mr. Hu's taking of bribes. His guilty plea, officials said, had affirmed their claims.

But in a sign that relations between the two countries had begun to warm, Rio Tinto last week announced it had agreed a $ 1.3 billion deal to jointly develop an iron ore mine with Chinalco in Guinea, West Africa, even as the trial was underway in Shanghai.

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